Does Judge Scheindlin blast proposed FRCP amendments for all the right reasons?

The Honorable Shira Scheindlin, federal district court judge for the Southern District of New York, went out of her way to slam newly proposed amendments to the Federal Rules of Civil Procedure (Rules) in a recent court opinion and order (opinion). The impact of Judge Sheindlin’s opinion is likely to have a profound effect on the Rules debate given her influence over changes to the original e-discovery amendments in 2006. Not only was Judge Scheindlin a longtime member of the Federal Rules of Civil Procedure Advisory Committee from 1998 to 2005, several of the issues she addressed in her Zubulake line of decisions were incorporated into the current Rules back in 2006 – perhaps explaining how she earned the moniker the Godmother of E-discovery.

Proposed Rule 37(e)

In Sekisui American Corporation v. Hart, Judge Scheindlin lambastes proposed Rule 37(e) for creating “perverse incentives” and encouraging “sloppy behavior.” In particular she criticizes the proposed Rule for protecting parties who destroy evidence from being sanctioned for “negligent, grossly negligent or reckless” behavior. She also maligns The Advisory Committee Note to the proposed Rule for requiring the innocent party to prove that “it has been substantially prejudiced by the loss of relevant information, even where the spoliating party destroyed information willfully or in bad faith.” A more in-depth summary of Judge Scheindlin’s position on proposed Rule 37(e) titled: Judge Scheindlin Blasts Proposed FRCP Amendments in Unconventional Style is available here.

Regardless of whether or not you agree with Judge Scheindlin’s analysis, the lack of meaningful dialogue about the role technology and process play in controlling costs is surprising considering proportionality is the mantra of those advocating for Rule changes. Proportionality generally refers to the notion that e-discovery should be fair to the parties involved. Common factors judges must consider when evaluating whether or not a discovery request is proportional are already included in the current Rules. For example, Rule 26(b)(2)(B) requires judges to limit discovery if they determine that:

“the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”

Surprisingly, neither the current nor the proposed Rules specify that a party’s technology and process should be evaluated as part of the proportionality analysis. That should leave many scratching their heads considering these factors have a significant impact on the burden and cost of e-discovery.

Why are technology and process critical to the proportionality analysis?

The savvy practitioner realizes that there are many factors impacting the overall cost of e-discovery and sometimes incompetence is the biggest culprit. The volume of electronically stored information (ESI) and the amount of litigation an organization handles are key starting points for estimating overall e-discovery costs. However, the costs of e-discovery are significantly impacted by other factors like the technology solutions and process used to manage the preservation, collection, processing, review and production of ESI. Failing to follow a sound process or use modern technology solutions can have a dramatic impact on e-discovery costs and burdens. Understanding whether and how much of those costs and burdens are self-inflicted should be part of any thorough proportionality analysis.

For example, consider a party who withholds production of ESI they identify as “not reasonably accessible” because of “undue burden or cost” under current Rule 26(b)(2)(B). If the burdens and costs claimed are excessive because the party insists on printing, photocopying, and manually reviewing a million pages of email messages that could have been processed, searched, and reviewed electronically for a fraction of the cost, then claims of burden and cost may lack legitimacy. On the other hand, if the cost of processing, searching, and reviewing those same emails using a more modern technological approach is still excessive compared to the value of the case, then claims of undue burden and cost may be legitimate.

What does this mean?

Justice and fairness require judges and others who make the Rules to consider and understand the root causes of the problems the legal profession hopes to solve by introducing amendments. In the world of e-discovery, information growth is a problem that directly impacts the litigation budgets of thousands of companies across the globe. Public policy dictates that the future economic growth of these companies should not be stifled by Rules, insufficient judicial oversight, or poor lawyering that may result in undue e-discovery expenses and litigation. After all, much of the time and money spent on e-discovery today could be reallocated towards investments in research and innovation that could make the world a better place tomorrow.

On the other hand, public policy and fairness also dictate that companies should not expect complete protection from disclosing ESI when they are complicit in creating the very problems that make disclosure of their own information difficult or expensive. There are organizations that excel in managing e-discovery by implementing sound policy and technology approaches while other organizations unnecessarily drive up costs due to a lack of effort or skill. Many other organizations fall somewhere in the middle of the spectrum, but where they fall should be an important factor for courts to consider when evaluating discovery disputes related to burden and cost.

That is not to say courts should always expect every party to invest in and use the newest e-discovery technology solution on the market. However, judges should evaluate an organization’s general e-discovery process and use of technology compared to current best practices to assess the reasonableness of each party’s approach. Since technology and education will continue to improve over time, the reasonableness standard courts apply should also evolve over time. Admittedly the analysis will become difficult as newer technologies like predictive coding enter the fray because best practices around newer technologies take time to develop and undergo proper vetting. However, the fact that technology and standards will evolve over time should not preclude courts from applying common sense standards of reasonableness based on where best practices and technology stand today.

Conclusion

A meaningful debate about proportionality and the proposed Rule amendments requires a comprehensive diagnosis of the problem. To date, the role of technology and best practices as factors in managing e-discovery costs has not been a central theme of discussion. Hopefully these and other relevant factors will become a more significant part of the dialogue before the period for public comment on the Rules closes on Feb. 15, 2014.